The US is making a substantial investment in semiconductor technology, initiating a $1.6 billion competition aimed at transforming chip packaging and challenging Asia's longstanding leadership in this sector. The US Department of Commerce has unveiled an ambitious strategy to enhance domestic advanced packaging capabilities, which are crucial but frequently underestimated in semiconductor manufacturing.
This step, part of the Biden-Harris Administration's CHIPS for America initiative, aims to revive the US semiconductor industry and lessen reliance on international suppliers. Advanced packaging, critical in semiconductor manufacturing, has historically been led by Asian nations such as Taiwan and South Korea. Through substantial investment in this domain, the US seeks to redefine the global semiconductor market and establish a leading role in next-generation chip technology, signaling a notable shift in industry dynamics.
US Secretary of Commerce Gina Raimondo emphasised the importance of this move, stating, “President Biden was clear that we need to build a vibrant domestic semiconductor ecosystem here in the US, and advanced packaging is a huge part of that. Thanks to the Biden-Harris Administration’s commitment to investing in America, the US will have multiple advanced packaging options across the country and push the envelope in new packaging technologies”.
The competition will target five primary research and development areas: equipment and process integration, power delivery and thermal management, connector technology, chiplets ecosystem, and co-design/electronic design automation. The Department of Commerce plans to allocate around $150 million in federal funding per research area, expecting multiple awards. These investments will also attract additional contributions from industry and academia, enhancing collaboration and innovation in semiconductor technology.
The Biden-Harris Administration’s push to revitalise American semiconductor manufacturing comes as the global chip shortage has highlighted the risks of overreliance on foreign suppliers. Asia, particularly Taiwan, currently dominates the advanced packaging market. According to a 2021 report by the Semiconductor Industry Association, the US accounts for only 3% of global packaging, testing, and assembly capacity, while Taiwan holds a 54% share, followed by China at 16%.
Under Secretary of Commerce for Standards and Technology and National Institute of Standards and Technology (NIST) Director Laurie E. Locascio outlined an ambitious vision for the program: “Within a decade, through R&D funded by CHIPS for America, we will create a domestic packaging industry where advanced node chips manufactured in the US and abroad can be packaged within the States and where innovative designs and architectures are enabled through leading-edge packaging capabilities”.
This announcement extends the initiatives of the CHIPS for America program, which began with the release of its initial funding opportunity in February 2024 for the National Advanced Packaging Manufacturing Program (NAPMP). This phase concentrated on advanced packaging substrates and substrate materials, drawing substantial interest as evidenced by over 100 concept papers submitted from 28 states. By May 22, 2024, eight teams had been chosen to advance, with each eligible for funding of up to $100 million over a five-year period.
The upcoming competition is anticipated to draw considerable attention from the US semiconductor industry and alter its dynamics. It offers substantial federal funding and the chance to influence the trajectory of American chip production. With global demand for advanced semiconductors on the rise due to AI, 5G, and other emerging technologies, securing technological leadership has become increasingly critical.